Must Read: “The Decline of California”

Editorial from tomorrow morning’s Wall Street Journal:

If you thought Washington’s stimulus debate was depressing, take a look at the long-running budget spectacle in California. The Golden State’s deficit has reached $42 billion, Governor Arnold Schwarzenegger is threatening to furlough 20,000 state workers (go ahead, make our day), and as we went to press yesterday Democrats who control the legislature had blocked lawmakers from leaving until they finally get a deal.

t’s sad to watch. The Golden State — which a decade ago was the booming technology capital of the world — has been done in by two decades of chronic overspending, overregulating and a hyperprogressive tax code that exaggerates the impact on state revenues of economic boom and bust. Total state expenditures have grown to $145 billion in 2008 from $104 billion in 2003 and California now has the worst credit rating in the nation — worse even than Louisiana’s. It also has the nation’s fourth highest unemployment rate of 9.3% (after Michigan, Rhode Island and South Carolina) and the second highest home foreclosure rate (after Nevada).

Roughly 1.4 million more nonimmigrant Americans have left California than entered over the last decade, according to the American Legislative Exchange Council. California is suffering more than most states from the housing bust, but its politicians also showed less spending restraint during the boom. [Read More - really]